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Sending a child off to school this fall? Here’s a few legal issues to keep in mind.

by Westray Veasey, J.D.

Do you have a child who has recently turned age 18?  If so, he or she is likely off to college, taking a gap year or working and living outside of your home.  Since you are likely paying your child’s tuition and insurance and claiming your child as a dependent on your tax return, it may surprise you that you no longer have access to your child’s health, financial or educational records.

In North Carolina as in many other states, once a child turns age 18, the child is considered an adult by law.  In addition, under the Health Insurance Portability and Accountability Act (“HIPAA”), the privacy of his or her personal health information is protected.  For you to be able to assist your young adult child with medical and financial decisions, whether he or she is incapacitated or simply needs your help, your child must give you express authority in certain legal documents:

  • A health care power of attorney gives someone the authority to make health care decisions for you and to receive information about your medical condition if you are incapacitated.  Some states may allow parents to consent to their adult child’s medical treatment, and in an emergency situation, a doctor may choose to convey critical information to an adult child’s parents if that is in the child’s best interests.  To be assured that you will be able to make health care decisions for your adult child in an emergency, however, your child should have a health care power of attorney.  North Carolina has a statutory form health care power of attorney, and the Secretary of State’s website has a link to a Word version of the form (health_care_power_of_attorney.pdf (sosnc.gov)).  North Carolina has an online registry through the Secretary of State where you can upload your health care power of attorney.  A child’s registry login credentials can then be shared with parents and medical providers.
  • If it is desirable for you to be granted access to your adult child’s medical records and be given permission to consult with his or her medical providers, your child should also sign a HIPAA medical information release form.  The authority granted under a health care power of attorney to receive an adult child’s medical information only applies if the child is incapacitated.  Note that your child can stipulate which parts of his or her health records remain private.  Be advised that disclosure of a college student’s campus health clinic records may require an additional permission form.
  •  A financial power of attorney appoints someone to make financial and legal decisions for you.  If your adult child is comfortable appointing you as his or her agent under a financial power of attorney, you can assist your child with everyday matters such as paying bills, filing a tax return, signing a lease or managing an investment account, or you can take over all of your child’s financial matters should he or she become incapacitated.  Your child should be aware that a financial power of attorney can be used to allow parents to access education records (read: grades)!  North Carolina has a statutory form financial power of attorney.

While form health and financial powers of attorney and HIPAA authorizations can be found online, it is advisable for your adult child to engage an estate planning attorney to prepare and explain the various options and provisions in these documents, such as organ donation and end of life options in the health care power of attorney.  These documents are easy and relatively inexpensive to prepare.  Most states recognize powers of attorney validly signed in other states.  If your adult child calls North Carolina home but is temporarily residing in another state, your child should only need North Carolina powers of attorney, but your child’s attorney can confirm whether he or she should also have powers of attorney in the state of his or her temporary residence.  Similarly, if your adult child is studying or working abroad, you can consult with an attorney on whether any additional documents are needed to grant you permission to access your child’s financial and health records while in another country.

The next time your adult child comes home for a visit, discuss the importance of having these documents in place so that you can provide assistance when your child wants or needs it, and line up a consultation with an estate planning attorney who can discuss and prepare them.  You can assure your child that he or she retains control of the ongoing validity of these documents and can revoke or change them at any time.  And once you have all the right documents in place, make sure copies are readily accessible to both you and your child.

What I Learned At The Grand Canyon About How To Live My Life

by M. Burke Koonce, III

Almost exactly three years ago, I wrote this brief essay about a trip to the Grand Canyon our family had taken while my daughter was being evaluated at the Mayo Clinic in Scottsdale, Arizona. She was born with a chest-wall abnormality that would eventually require surgery.

That “eventually” eventuated three weeks ago, and I am thrilled to report that the procedure went wonderfully, and, so far anyway, she is doing extremely well—so well that it’s difficult for any of us to believe—a long, tall and healthy 16-year-old girl, with even a few smiles thrown in. If you don’t believe in miracles, or if you just want to feel a little humility and gratitude, spend some time around a pediatric hospital. Trust me.

Meantime, there’s a new stripe on the canyon wall of my memory. Special thanks to the physicians and staff at Wake Med Children’s Hospital.

I was in Arizona this week tending to some family business at the Mayo Clinic—it was possible that my daughter would require major surgery, so forgive me in advance for any subconscious del into an overly emotional state. However, I wanted to share with you my thoughts about perhaps the most incredible thing I have ever seen.

It’s the Grand Canyon.

I’d seen it once before, years ago. I drove from Raleigh to the Grand Canyon over a couple of days after graduating from business school. And it was an unforgettable sight even back then, but there’s no doubt in my mind that the more acute sense of human frailty that develops with middle age compounded the impact of seeing it again.

Part of the fun of seeing the Grand Canyon for the first time is that there’s no dramatic build up—there’s no mountain range in the distance or obvious change in the immediate surrounding landscape. It’s hidden by trees until you’re just steps away, because, after all, it’s a hole. And then, it’s as if you’ve suddenly arrived at the edge of the entire world. Edging closer to it, your heartbeat quickens and you sense a primordial command installed by evolution—be careful. Five to fourteen miles across and more than a mile down to the Colorado River. I enjoy imagining what the Spanish conquistador Garcia Lopez de Cardenas must have thought upon encountering it for the first time. What did he say to his boss Coronado about not being able to make it down to the river? “Um, Francisco, all I can tell you is that it’s really big.” It’s also 277 miles long. That’s the distance from Raleigh to Charleston, S.C.

Of course, as you gaze into the Grand Canyon, your eyes are immediately drawn to the rock strata exposed on the canyon walls like layers of a cake. The Colorado River has been cutting away at the Colorado Plateau for about 6 million years. That’s a difficult number for human being to comprehend. As the Nobel-prize winning economist Daniel Kahneman pointed out, we have no environmental reason to be able to really understand how large of number that is. But the fact is, the Colorado River has been seeking sea level for 6,000 centuries.

Now, 6,000 centuries is a long time, but rocks exposed inside the Grand Canyon date back almost 1.8 billion years. Said another way, the rocks exposed in the basement of the Canyon, in a section called the Vishnu Schist, are 300,000 times as old as the Grand Canyon. (You know when a rock formation is named after an ancient Hindu god, it’s old.)

The exposed Vishnu Schist section dates from a collision between a group of volcanic islands and the southwestern coast of North America, which was at the time near present day Utah and southern Wyoming (did everybody know this but me?). About 1.2 billion years went by, and eventually this gigantic rocky crash site had been ground down to sea level. This allowed inland seas to form and fade, with their fortunes painted in the rock strata in the color of rust, because, after all, that’s what water does to iron. Then, a mere 250 million years ago, tectonic activity resumed, drying out the seas and forming the humungous sand dunes that cause the top section of the Grand Canyon to appear white, not red. Finally, in the geological equivalent to fairly recent (a mere 60 million years ago), the subduction of the Pacific plate beneath the North American plate caused the Colorado Plateau to lift up through the earth’s crust, exposing all of this cool stuff. That’s why the topography of Arizona changes so dramatically starting around Sedona, a couple hours south of the Grand Canyon—a huge plateau basically just got raised thousands of feet above the rest of the earth’s surface. Think of the plateau as a tall stack of pancakes and the Colorado River as a knife exposing all that flaky goodness.

So compared 1.8 billion years, 6 million years seems like a hockey season. It’s nothing. And yet it’s as long as the twenty centuries since the time of Christ multiplied by 3,000.

Again, our brains are just not equipped to comprehend how old this planet is. In all that time, so much has happened, both to the earth itself and to the creatures that inhabit it. It’s a shame we cannot really put it into perspective. The indefatigable power of time is relentless, remorseless, and truly invincible.

In contrast, the presence of humanity is like a fraction of a nanosecond in the geological spectrum. Our time here is so brief! Borrowing some financial nomenclature, the time that humans have been present on earth, about 200,000 years, represents less than half of a single basis point vs. the age of the earth.

Our ventures, concerns, and businesses could hardly be more meaningless in the fullness of time. But of course, it is the rarity of life that makes it so precious. The fact that it doesn’t last, that our time here is so fleeting and ephemeral, is what makes every moment so important.

Our family had a scare recently. Our daughter was diagnosed with a condition that could eventually require major surgery around her heart. We received good news at the Mayo Clinic—the doctors determined that we didn’t need to do anything now. But those moments in the clinic waiting on the verdict with a 13-year-old girl, all skinny elbows and knees and long, long hair—those moments will live forever in my mind. Those moments are now a great rust-colored stripe on the canyon wall of my life.
So what does all of this have to do with anything? (I warned you about the emotional state!)

I think the takeaway from my week studying geology and musculoskeletal biology is a lesson in probability and compounding. To achieve even the smallest goal, financial or otherwise, you’ve got to harness the power of time and try to employ it in your favor. Anything else is just folly and dumb luck. You’ve got to allow your successes and good habits to compound and you’ve got to avoid playing near the edge of the abyss. That’s it. We’re all human beings who take uncompensated risks and do dumb things, but you’ve got to keep your eye on the cliff wall. You’ve got to let the seas form and the wind blow. You’ve got to let the pressure build. And you’ve got to remember that 13-year-olds don’t last forever, and neither do 48-year olds. Your life and the lives of your loved ones aren’t special in the sense that they are worth more than somebody else’s but they are rare indeed and if you don’t want the odds in your favor as you try to protect and nourish them, you’re a fool.

As you allocate your time, do so in way that considers the opportunity cost and the power of compounding. As you consider your own health, do so in a way that considers opportunity cost and the power of compounding. Certainly, the same goes for your capital.
And remember the words of Ellis “Red” Redding, Andy Dufresne’s friend in the film The Shawshank Redemption:

“Geology is the study of pressure and time. That’s all it takes, really… pressure… and time.”

A Job Well Done

by William Smith, CFP®

Honoring Two Special Colleagues

Years ago, at least before the Great Resignation, prospective new hires would often comment “I hope this is my last job.”  With the labor market in disarray, such a bold claim rarely comes to pass these days.  However, at Trust Company in the past several months, we’ve had two special colleagues honor that very commitment and finish their distinguished careers with us.

Many Trust Company clients have had the pleasure of working with Lou Nunn during the past five years.  Having held previous posts in client service with regional commercial banks, Lou joined our firm in 2017.  While our role offered a slight departure from her prior commercial bank positions, she confidently embraced the challenge and made an immediate impact.

A consummate player/coach with an ever-positive attitude and servant’s heart, Lou excelled in her role as our client services manager.  Training new hires, implementing new policies and procedures, consolidating our client services function into our Greensboro headquarters, and overcoming obstacles associated with the pandemic, Lou completed each and every assignment with professionalism and grace.  Having stepped down at the end of January, Lou is now busy taking care of her family, especially her two lovely granddaughters!

After an impressive career in financial services of increasing responsibilities with a Big Eight accounting firm, a regional executive benefits organization and a national wealth manager, Mitchell Paul joined Trust Company in 2009 during the depths of the Great Financial Crisis.  In an especially volatile period, Mitchell brought a steady hand and a depth of experience which propelled our firm to new heights.  Whether it was tackling complex systems-related problems, delivering responsive, thoughtful planning advice to our clients, or mentoring younger team members, Mitchell embraced challenges and opportunities with a high attention to detail and established himself as the very essence of what it meant to be a team-player.  With plans to pass the baton at the end of May, Mitchell and his family are excited to have more time to spend with their children and grandchildren.

On behalf of our colleagues and clients, I would like to thank both of these remarkable professionals for their contributions to our organization and wish them many years of joy and happiness in their next adventure!  Both Lou and Mitchell made valuable, lasting marks on our firm, we’re grateful for their service and friendship, and our team at Trust Company is proud to have you as a part of our family.

A Toast To Mr. Scrooge

by M. Burke Koonce, III

For the past seven years, my daughter has played a role in a local production of Charles Dickens’ A Christmas Carol, the 1843 novella that to a striking degree laid the foundation for how Christmas is celebrated today. This particular production amplifies the comic undertones of the original and is highly contemporary, which is one reason it just celebrated its 48th year. I first saw it when I was in elementary school. For reference, my older child just returned home from his first semester in college. The one constant in the play, which is performed as a musical, is Ebenezer Scrooge, played by the show’s creator.

Scrooge, of course, is a mean-spirited miser, a misanthrope whose hard-heartedness and self-absorption take a terrible toll not just on himself, but on his community, beginning with his long-suffering employee Bob Cratchit and by extension, Mr. Cratchit’s family, which includes the disabled child Tiny Tim.

When I first saw the play, I was perhaps just slightly older than Tiny Tim. I remember fearing Scrooge but also laughing at his obvious flaws. As a daydreaming kid, I really didn’t need to be told not to waste my life working in pursuit of money and riches (how ridiculous!). I needed no encouragement to celebrate holidays, most especially one in which I stood to receive an abundance of toys and candy in exchange for vague promises of decent behavior. But I was shocked by the vision of Tiny Tim’s death. It truly left an impression. Children weren’t supposed to die.

Well, they weren’t supposed to die in Raleigh in the 1970s, but in London in the 1840s, well, there was no such implicit guarantee. As the agrarian economy of Great Britain gave way to the Industrial Revolution and the Victorian era, urban children living in horrific conditions was becoming increasingly common.  Dickens himself was forced into labor as a child after his father was imprisoned for indebtedness. But A Christmas Carol is not a mere harangue against child labor; instead, it poses bigger questions to Victorian England, and really, of course, to all of us: what kind of society are we? Who are we as a people? Are we, as my economics professors described us using an x and y axis, nothing more than labor and capital?

After all, when I returned to A Christmas Carol as an adult, I must admit that old Mr. Scrooge seemed a lot more sympathetic, perhaps even prophetic. Why, who among us truly enjoys the mad scramble up to Christmas Day? The overspending, overindulging, brazen commercialization, and creeping cynicism all seem to suggest Scrooge might have been onto something. Bah, humbug, indeed! Even the tendrils of Scrooge’s most contemptible notion, that society ought to seek to “decrease the world’s surplus population” seeks to take dark root.

However, the horror of Tiny Tim’s fate had not diminished. As a younger adult, with my own small children, watching this scene hit me harder than before. Every child fears death, but parents fear nothing more than the death of their children. I can hardly bring myself to write about it. Thus for me, the meaning of A Christmas Carol began to change, as all our lives do, from the story of my own dreams, to the story of my dreams for someone else.

Scrooge’s path to redemption begins with the Ghost of Christmas Past reminding him of the younger version of himself, one who loved and was loved, before he was hardened by time and allowed himself to be slowly consumed by ambition and avarice.

The ghost conjures a vision of Scrooge’s mentor, jolly Mr. Fezziwig, a successful merchant who might be English literature’s first example of someone who had achieved the optimum “work/life balance.” Victorian readers would have recognized Fezziwig as a character from a vanishing era, one in which wealthy landowners would open their houses to their tenant farmers for a lengthy Christmastime feast (sometimes even lasting, wait for it, twelve days).

After all, it turns out Scrooge wasn’t born a monster. We learn he was sent off to boarding school at a young age by a distant father and not allowed to return home during the holidays. Little by little, he deviated from the model of the happily married and generous Fezziwig toward something wretched, but not until the Ghost of Christmas Present shows Scrooge the projected fate of Tiny Tim does the scope of his error begin to dawn on him. By the time the Ghost of Christmas Future delivers the vision of Scrooge’s own lonely, miserable death, we already know someone is about to have a change of heart.

This year, my children are much older than Tiny Tim was in that terrible vision. I even made it through that terrible scene without a tear, which for me is an extraordinary achievement. But I did not make it through the whole play. The one that finally got me (spoiler alert) was after Scrooge’s Christmas morning conversion when he becomes as a “second father” to Tiny Tim, promising to cure Tim’s lameness. These were tears of joy and hope, mixed with a few of salty resolve, because this was the recognition that we will all eventually die, that we must each contemplate our own legacy and that we can only hope that our worldly works will leave a positive mark.

Yes, somewhere between elementary school and AARP eligibility, the Scrooge miracle occurred for me just as it occurred for him. Call it humility, self-awareness, the Golden Rule, or a Commandment, the meaning of Christmas managed to penetrate my brain, even if just for a few days. Truly, what matters more than the ducats we accumulate is what we do with them, how we spend our time, and how we treat each other.

As Scrooge’s nephew said, “I always thought of Christmas time as a good time; a kind, forgiving, charitable, pleasant time; when men and women seem by consent to open their shut-up hearts freely, and to think of people below them as if they were really fellow-passengers to the grave, and not another race of creatures bound on other journeys.”

So, just as Bob Cratchit proposed, even before Scrooge was redeemed, here’s to Mr. Scrooge, the founder of our feast. For he is us, and we are him, and we will always be in each other’s company until we leave this earth.

And of course, as Tiny Tim said:

God bless us, every one!

Silver Linings

by Matthew Hornaday, CPA

The year 2020 was a remarkable year in many ways and forced each individual throughout the world to adapt to new norms in unimaginable ways.  As our firm responded to the COVID-19 pandemic, we made decisions guided by the original vision of our founders: to make an impactful, positive difference in the lives of our clients, their families, and our employees.  While there is much of 2020 we hope to never experience again, there were several silver linings that we celebrate:

Sticking to a Long-Term Financial Plan: We develop comprehensive long-term financial plans for our clients to first preserve then grow and transfer assets.  The importance of sticking to a long-term financial plan was highlighted in 2020.  The market downturn in March and April 2020 provided us an opportunity to ground our clients in their long-term financial plans, discuss if these goals had changed (most had not), and, if not, reinforce to our clients the importance of sticking to their long-term financial plan and remaining invested.  Sticking to a long-term financial plan won the day again, our clients let the markets work for them, and the temporary declines our clients experienced have since reversed in a significant way.

Deepening Connection: The COVID-19 pandemic has forced each of us to focus on what is most important in our lives and be present in ways not previously experienced.  It has been easier to prioritize in this context.  We have worked hard to maintain and deepen connection with each client.  Internally, we deepened connection via numerous platforms for employees to share firm-wide messages daily, ranging from sharing a meaningful life event or story to sharing each employee’s favorite charity (after which Trust Company provided a meaningful contribution to each).

Remarkable Employee Flexibility: Our employee team of 31 was resilient in adapting to a remote work environment in 2020.  Most of our team pivoted to work from home, we automated highly manual processes, became experts at screen sharing (via Microsoft Teams) and virtual meetings (via GoToMeeting), and established a virtual office setting to foster enhanced communication and connection.

Leading with Grace: Our journey through 2020 was not perfect, and we all had days when we did not feel like ourselves and felt down or depressed.  However, we continued to provide each other grace, which enabled us to emerge much stronger.  Grace soothed fears, calmed anger, and provided peace in an uncertain year.

Navigating the COVID-19 pandemic in 2020 forced us to prioritize, strengthen, and deepen.  As we turn the page to a new year, we remain committed to serving our clients as an independent and objective fiduciary – always prioritizing our clients’ interests ahead of our own.  Thank you for your continued trust in our firm.

Matthew Hornaday is Chief Operating Officer and a Principal in Trust Company’s Greensboro office.  In addition to managing client family relationships and several nonprofit client relationships, Matthew is also responsible for establishing and enhancing Trust Company’s operational controls, procedures and people systems, ensuring the continued financial strength and efficiency of the company.

The Power of Narrative

by A. Chase Reid, CFA, CFP®

Do you recognize the following story?

An aging patriarch runs a family business.  He has three sons and for health reasons is forced to choose a successor.  His oldest son is intelligent but brash.  His middle son is indifferent about the family business and unintelligent.  His youngest son is timid yet capable.  After his oldest son passes, the youngest son is left to take over the family business, something his father never wanted.  His youngest son is very successful and increases the business’s market share substantially.

This is my factual but dull retelling of the classic film The Godfather.

In my retelling of this story, I captured what happened – characters, setting, plot, conflict, resolution. Yet, the energy of the story was lost without the dialogue, actors, cinematography, and expert directing.  Recall the last few words of dialogue between Michael Corleone and his wife Kay in The Godfather:

Kay: (asking about Carlo’s murder) Michael, is it true?
Michael: Don’t ask me about my business, Kay.
Kay: Is it true?
Michael: Don’t ask me about my business…
Kay: No.
Michael: (slamming his hand on the desk) Enough! All right.
This one time, this one time I’ll let you ask me about my affairs.
Kay: Is it true? Is it?
Michael: No.

Even reading the dialogue does not fully capture Michael’s transition to the new head of the family, leaving his former self behind.

What is my point?  Story matters.  In fact, humans love stories.

We use stories for many purposes in our lives – to provide comfort, to rationalize decisions, to create arguments, to make people laugh.  But one of the flawed ways we use stories is to try to understand things too complex for our brains.

Nassim Nicholas Taleb was the first to give a name to this phenomenon in his bestselling book The Black Swan.  Taleb calls it the narrative fallacy.

“The narrative fallacy addresses our limited ability to look at sequences of facts without weaving an explanation into them, or, equivalently, forcing a logical link, an arrow of relationship upon them. Explanations bind facts together. They make them all the more easily remembered; they help them make more sense. Where this propensity can go wrong is when it increases our impression of understanding.” (Taleb, 2008)

Taleb references “our impression of understanding”.  This is a critical distinction from our actual understanding.  Below is a study to make Taleb’s point.

Consider the following passage from Thinking, Fast and Slow written by the Nobel Laureate Daniel Kahneman.  Here, Kahneman is sharing a study he performed:

Linda is thirty-one years old, single, outspoken, and very bright.  She majored in Philosophy.  As a student, she was deeply concerned with discrimination and social justice, and also participated in antinuclear demonstrations.

Which alternative is more probable?
1. Linda is a bank teller.
2. Linda is a bank teller and is active in the feminist movement.
(Kahneman, 2013)

Study participants overwhelming chose #2.  This answer is, of course, incorrect.  It is much more probable that Linda is only a bank teller.  Mathematically, there are more bank tellers than there are bank tellers who are also active in the feminist movement.  So, it is more probable that Linda is a bank teller only.

Did you fall prey to the trap answer?  Maybe you thought Linda was a bank teller who spent her nights and weekends fighting for women’s rights.  Then again, maybe you did not.  Maybe you collected yourself and recognized the word “probable” for what is was.  You saw right through Kahneman’s ruse and discovered the simple mathematical equation lying beneath the story.  Still, I hope you can imagine how you or any human might create a seemingly logical story about Linda which leads to answer #2.

Let’s consider a final story.  A story so complex that the probabilities are difficult to compute and the outcomes impossible to forecast.

On December 31, a pneumonia of unknown cause was reported to the World Health Organization’s China office originating in the city of Wuhan in Hubie province.  Over the coming days, the coronavirus that caused the strange pneumonia was given a name, COVID-19, and immediately began spreading across the globe.  As the virus spread, the number of people infected rose exponentially with many cases going undiagnosed.  Death tolls increased in China, South Korea, Iran, Italy, Spain, France, the UK, the United States, and many other nations.  Entire countries shut down in an attempt to contain the virus.  The global economy came to a screeching halt, and markets were in free fall.  Governments scrambled to contain the virus and address the significant shortages of medical personnel and equipment.  As death tolls continued to climb and economic effects began to be felt…

How do you think this story ends?  What are the eventual economic costs, death tolls, infection numbers, stock fluctuations, stimulus packages, interest rate changes, etc.?  It is impossible to know.  Further, it is impossible to know how all these bits of information will affect one another.

So how do humans react to a complex story like this?  We begin telling stories.  We play a dangerous game of connect the dots with an infinite number of dots.  Or we listen to someone else’s story.  Next, we make decisions based on these stories.  It’s a natural reaction, but it’s a flawed way to make decisions.

Consider the story of the stock market.  Over the past 100 years, we have experienced over 20 crisis events.  Each crisis had a vivid story to accompany it, yet the plot lines were the same: an unpredictable event occurs, markets react, over time markets recover, steadfast investors are made whole.  It really is that simple, but this presents our present challenge.

Will we focus on the boring plot lines or will we become engrossed in the story?

A Final Thought

I am writing this one day before the spring solstice.  Hints of spring are everywhere.  Out my window I see a flowering magnolia, blossoming tulips, and forsythia turning from yellow to green.  In light of the quarantine, my three-year-old daughter is out of school.  This morning my wife took her for a “nature walk” around the yard and down the street.  I saw her reach down and touch a tulip bulb for the very first time.  I wonder how that felt to her.

My seven-week-old daughter was in the stroller catching her first scents of spring – freshly mowed grass from our neighbor’s yard, honeysuckle vines that grow on our patio, and a field of daffodils.  And there was the warm sun.  Every spring has that first day when you feel the sun’s warmth for the first time in months.

These moments reminded me that all things change.  Change is the only constant.  No matter how dark, dreary, or damp winter is, spring shoots forward with no regard for the bleakness left by winter.

As humans, we naturally err by applying story to complex situations, but we naturally excel at coming together.  Our ability to come together has created knowledge beyond Einstein’s wildest dreams, art to be envied by da Vinci, music past Mozart’s imagination, and a country more prosperous than the founding fathers could have ever envisioned.

If we want a silver lining of this crisis, I suspect it is right in front of us.  It’s having kids home from college, sharing family meals, comforting each other, embracing your dog as your new co-worker, or seeking to help the suffering.

What will your story be of this crisis?

Will it be of frantic worry over the markets?  We already know how that story ends.  Or will your story be of spending time with those you love, seeking out the best in humanity, and doing our part to help our communities?

This story is real, and it is right in front of us.

Our Core Values

by Matthew Hornaday, CPA

In our 27th year of operation as an independently owned North Carolina trust company, we remain dedicated to providing exemplary client service and establishing lifelong relationships. We are committed to building upon our solid foundation so that we will not only be in business to serve our clients for the next five years, but for the next generation and many generations to come.

Trust Company’s core values are an essential component of our foundation. These basic tenets support our vision, shape our culture, and reflect what our firm values. We live out our principles through our words and actions each day, and reinforce our core values through quarterly performance reviews with each employee. These values guide our firm in making wise decisions, clarify our firm-wide identity, and help us to recruit and retain top talent. The five core values outlined below are the essence of Trust Company’s identity.

1. We exude honesty and integrity. Our team demonstrates honest, ethical behavior in all interactions. We go to great lengths to meet our commitments and will not make promises that cannot be kept. As a fiduciary, we act with transparency and put the interests of our clients ahead of our own. We exude honesty and integrity.

2. We treat others with respect. The key to any relationship is building genuine trust and respect. We are cooperative, considerate, and tactful in all interactions with clients, prospective clients, co-workers, colleagues, and vendors. We treat others as we would like to be treated. We treat others with respect.

3. We are committed to excellence. We demonstrate enthusiasm and take pride in the work we perform. Our team is challenged to and continuously develops their talents, skills, and knowledge. We strive not just to meet the expectations of our clients, but to exceed them. We are committed to excellence.

4. We help first. Our employees put the interests of clients and team ahead of their own. We share new information in a timely manner with interested parties, and demonstrate an appreciation for others’ time and priorities. We help first.

5. We get it done, efficiently. We deliver on our promises and obligations to clients and co-workers in a timely and thorough fashion without taking short cuts. We are well-trained and accomplish tasks efficiently. We follow time-tested firm processes and encourage our team to ask “why”, which drives continuous learning and improvement. We get it done, efficiently.

Our core values shape Trust Company’s actions and interactions each day. We are excited about the future of Trust Company, the strength of our team, and the culture we have built. We value your business and look forward to serving you for many years to come.

Matthew Hornaday is Chief Operating Officer and a Principal in Trust Company’s Greensboro office.  In addition to managing client family relationships and several nonprofit client relationships, Matthew is also responsible for establishing and enhancing Trust Company’s operational controls, procedures and people systems, ensuring the continued financial strength and efficiency of the company.

Why We Support the Wyndham

by Bill Smith, CFP®

Next month marks the twelfth consecutive season Trust Company has supported the Wyndham Championship held at the storied Donald Ross-designed Sedgefield Country Club.  Our sponsorship has expanded over this time, during which we’ve hosted over a hundred participants in the pro-am and more than a thousand clients and friends of the firm at our suite during the annual golf event.  The tournament has steadily gained popularity among fans, players and sponsors alike — many believe this year’s event could attract the best field in its history.  Trust Company is proud to have played a small part in this success story, and we wanted to share why we’re so committed to the Wyndham Championship.

Preserving a Legacy

At Trust Company, our business is about helping preserve legacies.  Our clients seek not only to pass their wealth to the next generation, but are often more concerned about transferring their family values or traditions – fundamental beliefs or behaviors that have made them successful and happy such as a strong entrepreneurial work ethic or a commitment to philanthropy.  From our perspective, the legacy of the Wyndham Championship, North Carolina’s oldest golf event, symbolized an important part of our local heritage and we were inspired to join the journey to restore its former glory.

Founded in 1938, the “Greater Greensboro Open” was the sixth oldest tournament on the PGA TOUR, boasting champions named Snead, Hogan, Nelson, Player and Ballesteros.  Generations of sports fans from our region and across the state witnessed legends of the game compete for the Sam Snead trophy.  By 2006, with an uncertain future ahead, the “Chrysler Classic of Greensboro” needed a change.  Greensboro business leader Bobby Long assembled a first-class team of professionals led by Mark Brazil, expanded the tournament’s board with members from across the Piedmont Triad, and scored a five-star title sponsor in Wyndham Worldwide.  In 2008, the “Wyndham Championship” relocated to its original home, Sedgefield Country Club, and has regained its proud status on the PGA TOUR thanks to this team working together with a common vision.

Building Relationships

At Trust Company, our business is about building relationships.  During the past twelve events, the Wyndham has afforded Trust Company an ideal setting to create special memories with our clients and their families.  Our suite overlooking the 17th green serves as the perfect relaxed (air-conditioned) venue to witness firsthand why the PGA TOUR says, “These guys are good!”  Clustered just outside our box, many of our clients’ young children or grandchildren have received a ball from players heading to the next tee, no doubt creating a fan for life.

Have you ever hit a tee ball inside the ropes on the first hole of a PGA TOUR event?  It’s an incredibly stressful moment, one you’ll likely remember forever, and each year our pro-am guests worry about how they’ll perform.  Englishman Paul Casey, currently the 15th ranked player in the world, shared an insightful perspective during a cocktail party a few years ago for our guests.  He offered, “If I came to your workplace and tried to do your job, made a few mistakes, or even worse, would you think less of me?  Just like many of you, I’ve worked at my craft for 20+ years.  You shouldn’t expect to perform like a golf professional.”

Similarly, Brandt Snedeker, the current defending Wyndham Champion, noted to a particularly anxious guest, “You won’t hit a shot tomorrow that will impress your professional, and more importantly, you won’t hit a shot so poorly that he’s never seen one worse!  Just enjoy yourself, enjoy the experience.”

Our sponsorship over the past twelve years has created countless memories to build even stronger relationships with our clients, employees, friends and professional colleagues.

 Promoting Our Region

Nearly thirty years ago, our firm was founded in Burlington and today is headquartered in Greensboro.  We care deeply about the competitive future of the Piedmont Triad.  Tournament director Mark Brazil estimates each year the Wyndham Championship provides a local charitable impact in excess of $1 million.  Furthermore, this tournament represents a significant annual opportunity for millions of individuals as well as potential employers from around the country to learn more about the Piedmont Triad, and our broader region newly branded as the Carolina Core (nccarolinacore.com).  Stan Kelly, CEO of the Piedmont Triad Partnership, shared, “The Wyndham is an unprecedented platform to market and shine a spotlight on our region. The amount of marketing and publicity is really unprecedented and priceless.”  With the tremendous economic development potential associated with the tournament, Trust Company believes supporting the Wyndham will ultimately preserve and enhance the quality of life in our region for generations to come.

We hope you’ll join us at the Wyndham Championship August 1st – 4th and enjoy the 80th celebration of this rich tradition!

Risk Management

by Jay D. Eich, CFP®, CPA

Risk Management for high-net-worth families involves cost-effectively transferring risk in order to minimize the financial damage of a catastrophic, unanticipated event.  A high-net-worth individual is faced with the added decision of whether to self-insure or purchase insurance coverage.  Some of the vital components of managing risk are medical, long-term care, disability, life, and property and casualty insurance.  Each of these areas has numerous products sold by a multitude of different providers.  Often the complexity of the products serves as a roadblock to purchasing coverage. At Trust Company of the South, we do not sell insurance policies. We do, however, help our clients identify potential areas of risk and then partner with firms who specialize in each individual area. Below are some issues to consider.

Life Insurance

Life insurance products can be categorized as either term or permanent.   In the case of term insurance, you purchase coverage for a set period of time.  The policy distributes proceeds only on the death of the insured.  On the other hand, permanent life insurance products, which include whole life, index universal life, and variable universal life, build cash value each year which can be withdrawn, in addition to protecting your family from lost income or assets via a death benefit.  High-net-worth individuals may also use life insurance to minimize estate tax (typically with second-to-die coverage), protect against the loss of a business partner (via a buy-sell agreement), and tax efficiently save additional assets.

One area that has received recent attention is life settlements – when a policyholder sells his or her policy to a third party for a lump sum cash payment.  More often, however, an unwanted policy is allowed to expire, or sold back to the life insurance company for a fraction of what could be received from a third party.

If you already have an existing policy, it is important to have an independent policy review to validate that the policy is performing as intended.

Medical Insurance

If you are an employee or business owner, your medical insurance will typically be through a company-owned policy.  Usually there are only a few coverage decisions to make, such as how high your deductible will be and whether or not you should combine your plan with a health savings account.  In 2020, that will change.  In 2020 companies will be able to provide employees with tax-free dollars to purchase an individual policy rather than offering participation in a traditional group health plan, thereby generating many more coverage options.  If you are self-employed or no longer working, there are already numerous coverage decisions to make including which Medicare plan to select.

High-net-worth individuals need to pay careful attention to coverage when travelling abroad. Many of our clients own second homes in remote areas and need to consider additional coverage such as Medivac transportation.  Many also purchase concierge medical service coverage.  Concierge medical coverage occurs when there is a relationship between a primary care physician and a patient when, in exchange for enhanced care, the patient pays an annual fee or retainer.  The annual fee allows the physician to reduce his or her patient load and thus have more time with each patient.

Disability Insurance

Many individuals focus on providing for their beneficiaries in the event of death, and often underestimate the impact of a significant drop in income. When evaluating disability insurance, points to consider include whether or not disability income is taxable (it will depend on the policy) and how much income is covered.  Often high-net-worth individuals receive significant bonuses which they use to fund living expenses, but many disability policies cover only the loss of salary, not bonuses.

Property and Casualty Insurance

As wealth increases, the need for more customized property and casualty insurance solutions becomes necessary.  Assets may include multiple luxury residences, often remote, private air and watercraft, classic and exotic automobiles, jewelry and art. A review will often reveal that clients are underinsured, usually because they are using a provider who does not focus on the needs of high-net-worth families. We typically see clients underinsured in the area of umbrella insurance, which provides coverage in excess of the limits specified in other policies.

Long-Term Care Coverage

Long-term care insurance encompasses care not covered by health insurance, Medicare, or Medicaid. Coverage begins when one can no longer perform the activities of daily living such as eating, dressing, or bathing.  According to the Administration for Community Living, part of the Department of Health and Human Services, roughly seven in ten people turning age 65 today will need some type of long-term care services.  On average, care is needed for three years, but in many instances can be longer.  High-net-worth individuals typically prefer to receive care at home. Cost for in-home care or care at a high quality facility can easily exceed $100,000 a year.

Long-term care polices can be sold separately or combined with a life insurance policy.  While high-net-worth individuals have the asset levels to self-fund, there can be situations, both financial and emotional, in which they should consider purchasing a long-term care policy.

At Trust Company of the South, we believe in a holistic approach to wealth management; effective wealth management is much more than managing money.  We work with our clients to analyze and provide solutions to minimize the risks they face related to loss of income, health and property. Please contact us if you are interested in a review of your risk management plan.

Building for the Next Generation

by Matthew Hornaday, Chief Operating Officer

Trust Company’s purpose is to enrich the lives of those we serve.  Our team of 28 employees strives each day to carry out this mission by providing comprehensive financial solutions to high net worth families and institutions.  We were founded in 1992 in response to eroding service by the large banks.  Now in our 26th year of operation as an independently owned North Carolina trust company, we remain dedicated to providing exemplary client service and establishing life-long relationships, and committed to building upon our solid foundation so that we will not only be in business to serve our clients for the next five years, but for the next generation and many generations to come.

As Trust Company continues to grow, improve, and evolve, we must make strategic modifications and enhancements to the firm.  Over the last two years, we have created four new roles in order to effectively serve our clients and to position ourselves for the future:

  • Client Services Manager: To manage our client services team across our Greensboro, Raleigh, and Charlotte offices, and maintain continuity in our client administration processes.
  • Compliance Officer: To manage the firm’s internal and external compliance responsibilities, and interaction with the NC Banking Commission and Internal Auditors.
  • Tax Director: To manage our tax practice.
  • Chief Operating Officer: To oversee the day-to-day operational and administrative aspects of the firm.

In addition, we continue to make enhancements to our processes and software platform including:

  • Transfer Forms: In an effort to increase client asset security, in 2018 we began requiring clients to complete a form including a directive in order to transfer funds to or from accounts on a one-time or recurring basis.
  • Customer Relationship Management (“CRM”) System: In March 2019, Trust Company launched a new CRM system, which will enable the firm to more effectively manage our client relationships and business processes.
  • ShareFile Vault: Trust Company utilizes ShareFile to securely send files to and from clients and third parties.  In 2019, we will more fully utilize the vault functionality within ShareFile to securely and seamlessly provide documents to clients and service providers.

We are excited about the future of Trust Company, the strength of our team, and the enhancements we have made and will continue to make.  We look forward to serving you for many years to come.

 

Seeking Wisdom

by Chris Sutherland, CPA

Where do you turn for intellectual stimulation? For me, it starts with books and podcasts, but is cemented with relationships. What is the equation for good relationships? It’s hard to have strong relationships without experiences that bond and lead to stories. So, experience + story = relationship. I’m very fortunate to belong to two book clubs. Without those relationships, the books and podcasts have much less value. Below you will find some of both that piqued my curiosity this year.

Tribalism was a buzzword in 2018. It basically means being overly loyal to your own group. In its worst sense, tribalism is a lack of relationship. In her book, Strangers in Their Own Land, Arlie Russell Hochschild attempts to build an “empathy wall” with folks in Lake Charles, Louisiana by immersing herself in their culture. As a California Berkeley professor, she is much different than the folks she befriended in Louisiana. Her background as a sociologist is valuable, but it’s nearly impossible to remove all bias.

I’ve mentioned Just Mercy, by Bryan Stevenson, in prior blogs. I read it again recently. It was a game changer in how I viewed our justice system. The Innocent Man, by John Grisham, had a similar impact. I’m a Grisham fan, but this book is a little different. I believe it is his only foray into non-fiction. It tells the story of Ron Williamson, a former minor league baseball player from Ada, Oklahoma who was wrongly convicted of murder. If you are more into watching than reading, Netflix recently released a documentary adaptation by the same name. I watched all of the first season on two plane flights.

I subscribe to many podcasts. One of my favorites is On Being, by Krista Tippett. The On Being Project started with a radio show about faith and spirituality. While staying true to its roots, it has morphed into a pursuit of “deep thinking and social courage, moral imagination and joy, to renew inner life, outer life, and life together.” One of my favorite episodes of 2018 was Rachel Naomi Remen. Rachel is a physician and author. In this episode she discusses how healing is different than curing and how “science defines life in its own way, but life is larger than science. Life is filled with mystery, courage, heroism, and love. All these things we can witness but not measure or even understand, but they make our lives valuable anyway.”

After listening to Dr. Remen, I was compelled to pick up her book, Kitchen Table Wisdom. The book was a New York Times best seller after its release in 1996. The 10th anniversary edition digs deeper into healing stories. The forward by Dr. Dean Ornish introduces the book well – “Great artists in any field have the rare ability to see our world and our lives anew, to experience life directly without it being filtered through beliefs, expectations, and preconceptions. They can capture a lost sense of wonder and experience the full richness of life.” This book is a collection of stories about savoring and celebrating life, not about fixing wrongs.

As I reflect back on the past year and hope for less tribalism and more relationship, here are a few other books and a podcast that made an impact: Tattoos on the Heart, by Gregory Boyle, Breathing Under Water, by Richard Rohr, The Road to Character, by David Brooks, and Conversations with Tyler: Ross Douthat. At Trust Company of the South, we are very fortunate. Our vocation is all about relationships. Thank you for being a part. We all look forward to more experiences and stories in 2019!

Lasting Happiness

by Wallace Williams, CPA

A slew of studies released in the past few years have shown that counter to prevailing logic, the purchase of experiences – such as a family trip – make us happier than the purchase of things – such as a new house or a new car. On the surface it seems a better investment to spend a significant sum on a new car, which we will use and enjoy for years, rather than a family trip to Hawaii, which will be over and done in two weeks. But apparently not, for a number of reasons…

First, studies have shown that anticipating an experience elicits more happiness and excitement than waiting on a material good; waiting for a possession tends to be tinged with frustration rather than gleeful anticipation. Think about looking forward to that beach trip as opposed to waiting in line for a new iPhone. Some have hypothesized that anticipating an experience opens a world of possibilities and imagination – we’ll swim in the ocean, and walk on the beach, and eat at our favorite restaurant – while anticipating the possession of a material good is more limited – my new iPhone will have a bigger screen.

Secondly, with experiences we are less likely to fall victim to “keeping up with the Joneses”. People are less likely to measure the value of their experiences by comparing them to those of others – which is not always the case when it comes to our material possessions, such as our homes and cars and gadgets. So therefore experiences bring us more happiness, as they tend to remain untainted by the stain of envy and covetousness.

Most counterintuitively, studies have shown that in the long run, experiential purchases make us happier than material purchases, even though the material purchase is physically present for far longer. This is because as human beings, we have a remarkable capacity for what’s known as “hedonistic adaptation” – we stop appreciating things to which we are constantly exposed. The thrill of the new iPhone wears off after just a few days, but the trip to Hawaii – we’ll remember that with fondness for years to come.

And here’s another thing: our material possessions deteriorate and become obsolete over time. The new car gets a few dings in it. Our cool new iPhone is usurped by a later and greater version. But our memories of experiences actually get sweeter with the passage of time. Even a difficult and unpleasant experience – say that camping trip when the dog threw up all over the inside of the tent – becomes a great story.

Most important of all, purchased experiences are usually not solitary endeavors; we tend to share them with others. These shared experiences bond us more closely to those we love, and the act of remembering those experiences, over and over in the years to come, solidifies and strengthens those bonds. The latest iPhone, in all its technological glory, doesn’t come close to that kind of return on investment.

So if you’re thinking about investing your time and money in either an experience or an object – pick the experience. It will bring you far greater returns over the long run.

Wallace serves as Chief Financial Officer of Trust Company, as well as overseeing the Human Resources function.  She is a Certified Public Accountant, and joined Trust Company in 2004 after an eight year career in public accounting with Arthur Andersen, and several years as a controller in a not-for-profit organization.